“To bridge current account deficit and to bolster flow of funds into India, we are ready and have been gradually taking a lot of steps to deal with the situation… Depending on the situation as it proceeds, you will probably see more steps which are required,” he said at the Hindustan Times Leadership Summit.
He said the government has already taken a series of steps, including cutting its borrowings by Rs 70,000 crore, doing away with withholding tax on masala bonds for the moment and allowing oil marketing companies to raise funds worth $10 billion.
Jaitley said the current account deficit is directly linked with global oil prices, which has been going up recording the highest level in the last four years, and is going to have some adverse impact.
“We are trying our best to take measures to narrow it down. Some more steps are likely. But there are two factors, both external: one is the oil prices and the second is the policies within the US which is leading to the hardening of the dollar itself, and therefore affecting other currencies all over the world.
“As far as our internal situation is concerned, we have to consolidate our systems so the adverse impact on our growth is the least,” the Minister added.
On the falling rupee, Jaitley said it is a cause of concern due to the variance in political and economists’ opinion, and if one only looked at the transient situation.
“But since it is a creation of two factors — oil and hardening of dollar — once you have a settling impact, it (rupee) will find its own level. But what that level is, it has to be decided on the real strength of where the rupee stands and where the economy stands,” he said.
Expressing confidence in the robustness of Indian economy, the Finance Minister said the current situation is a “short-lived” phenomenon and won’t last indefinitely.
Jaitley said India has huge avenues of growth over the next 10-20 years to sustain its high growth rate.
“If you leave these two transient situations (oil and dollar), India has consistently acquired 7.5 (+/-) per cent growth rate, and we comfortably achieve that. In today’s global situation, that is the highest in the world.
“With these factors over the next two decades, there is a lot of potential. India’s ability to maintain the present growth rate for a decade or two is reasonably certain,” he said.
Jaitley hoped that India would never see the kind of “horrible” economic data as it existed in 2013, before the Bharatiya Janata Party (BJP) came to power.
“CAD at that time was 4.7 per cent, fiscal deficit at 5.6 per cent and during the UPA II, the average inflation was around 10.4 per cent between 2009 and 2014. Hopefully, India would never have that kind of horrible data again,” he said.
Maintaining fiscal prudence is a top priority for his government, as it can take certain liberties only if the economic data is good, Jaitley added.